FinTech in Turkey: Overview
Ekin İnal and Ecem Naz Boyacıoğlu provide an overview of FinTech in Turkey.
2016 has witnessed creative approaches to remedies and conditions by the South African competition authorities. Three recent cases come to mind, namely; ArcelorMittal’s settlement with the Competition Commission in relation to cartel and abuse of dominance allegations; Media24 vs Competition Commission, which related to allegations of predatory pricing in relation to community newspapers in the Welkom region and the merger between Anheuser-Busch InBev and SABMiller. These cases all deal with different competition law issues but what is common amongst them is the creative approach used by competition authorities to address anti-competitive conduct or effects.
There were a number of complaints before the competition authorities involving ArcelorMittal. The Competition Commission alleged that the steel-maker was part of a cartel that engaged in collusion with CISCO, Scaw and Cape Gate by fixing prices and discounts, allocating customers and sharing commercially sensitive information in the market for the manufacture of long steel products. The Commission further alleged that ArcelorMittal and others fixed the purchase prices of scrap metal and flat steel. ArcelorMittal admitted all the allegations against them except fixing the purchase price of flat steel. In addition, there were two ongoing abuse of dominance complaints. Ultimately the Commission and ArcelorMittal reached a settlement where an administrative penalty of R1.5 billion would be paid along with various remedies. ArcelorMittal agreed to remedies relating to complaints against its pricing conduct without admitting that its pricing conduct constituted a contravention of the Competition Act. In particular, it agreed to limit its EBIT (earnings before interest and tax) margin to a cap of 10% for flat steel products sold in South Africa for a period of 5 years. In addition it has committed to a R4.6 billion capital expenditure over the next five years. The penalty was significant because it is the largest penalty imposed on a single company since the Competition Act came into force. More interesting however, are the margin caps and capex commitments. Competition authorities generally loathe regulating pricing in any way and would rather leave it to competition to reduce pricing in a relevant market. However, given ArcelorMittal’s strong market position, this may be an effective remedy. The settlement agreement will have a significant financial impact on ArcelorMittal but the settlement brings an end to all competition complaints it was facing which may be an acceptable bargain. The settlement agreement is still to be confirmed by the Competition Tribunal.
Some have welcomed the remedies imposed on ArcelorMittal but critics have deemed the penalties excessive. The Commission is willing to use alternative methods to protect competition in a forward-looking way by addressing the cause and focusing on the direct impact that anti-competitive conduct has had on consumers. The Commission cannot undo the consequences of anti-competitive conduct but it can attempt, through its enforcement powers, to redress the effects of such conduct. The Commission has stated that it is hopeful that the penalties will send a strong message of deterrence. As such, the Commission views this case as an important milestone in enforcement against cartels. What is certainly clear is that parties settling competition complaints should expect that the Commission may not be satisfied with the payment of a penalty and that alternative remedies will be on the table.
The Media24 matter is one of the first predatory pricing cases before the Competition Tribunal. Ultimately predatory pricing could not be proved but the Tribunal found that Media24 had engaged in an exclusionary act similar to predatory pricing. The section of the Competition Act that the Tribunal found Media24 to have contravened does not carry a penalty for a first-time offender. However, the Tribunal requested the Commission and Media24 to propose remedies to address Media24’s conduct. The Commission sought to interdict Media24 from publishing a further newspaper in the Goldfields area for six years, and wanted Media24 to sponsor a new rival in the area at a cost of R10 million. Media24 proposed offering R1 million in funding to train new and upcoming journalists. The Tribunal rejected both proposals and instead ruled that Media24 must provide 90-day credit facilities for the printing and distribution needs of current and new entrants to the market. Media24 have appealed against the finding.
The remedy has led to differing opinions and critics view the remedy as tantamount to a penalty. The remedy is innovative and seeks to foster a competitive environment in the market going forward. The competition authorities have far-reaching powers to find ways to address anti-competitive conduct and it appears that they are increasingly seeking alternatives to traditional penalties or undertakings not to engage in the conduct going forward. The appeal will be a symbolic development for the law of predatory pricing whichever way it goes.
The merger between Anheuser-Busch InBev SA/NV and SABMiller plc, did not, at first glance present many competition or public interest concerns, however, it was ultimately approved subject to the most extensive merger conditions seen to date. This has been the most expensive merger to date at the Tribunal, so it was no surprise that it gained interest from a wide range of stakeholders including three government departments, business forums and trade unions. The Commission identified a number of competition and public interest issues during its investigation of the merger. Government was concerned about the impact the merger would have on the South African economy and the public interest. The merging parties agreed to a significant set of conditions which included undertakings to ensure that its employees who are involved in bottling operations for Coca-Cola will not also be involved in its bottling operations for Pepsi, to prevent sharing of commercially sensitive information between the two entities, divesting its interest in Distell within three years after closing; ensuring that small brewers have access to fridges in pubs and taverns, and creating a R1 billion fund over five years for the development of South African agricultural outputs for barely, hops and maize, as well as to promote entry and growth of emerging and black farmers in South Africa.
This Anheuser-Busch merger concluded with fifteen conditions imposed many of which relate to issues that do not at first blush directly relate to the merger. Although the use of conditions to address competition and public interest concerns in not a new approach. The Commission does appear to be approaching issues more creatively, directly and perhaps with broader policy goals in mind.
Competition authorities seem to be using more creative approaches and alternative remedies when assessing matters and are not afraid to use the powers at their disposal. The remedies seem to be more forward looking and are far reaching. Competition authorities seem to be exploring more ways of addressing concerns and parties engaging in mergers or facing complaints of anti-competitive conduct may find themselves subject to remedies that have a direct impact on the management and strategy of their businesses going forward.
This article first appeared in Without Prejudice
Ekin İnal and Ecem Naz Boyacıoğlu provide an overview of FinTech in Turkey.
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